New Delhi's overwrought reaction to a diplomatic kerfuffle jeopardizes ties that had been strengthening.

With the so-called Khobragade affair, involving the arrest of an Indian diplomat in New York, stretching into its third week with little sign of resolution, it looks increasingly likely that the damage to U.S.-India ties will be long-term. Widely held assumptions in Washington and New Delhi—that both countries had found a way to forge a stable, mutually beneficial partnership—turn out to have been premature.

By now the bare bones of the controversy are well known. On Dec. 12, U.S. marshals briefly arrested 39-year-old...